SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934 for the quarterly period ended June 30,
2001.

Or

[ ] Transition  report pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934 for the transition period from _____ to
_____.

Commission File Number: 0-22401

BIONX IMPLANTS, INC.
(Exact name of registrant as specified in its charter)

Pennsylvania
22-3458598
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)

1777 Sentry Parkway West
Gwynedd Hall, Suite 400
Blue Bell, Pennsylvania 19422
(Address of principal executive office, including zip code)

215-643-5000
(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if
 changed since last report)

Indicate  by check  mark  whether  the  registrant(1) has  filed
all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports)
and
(2) has been subject to such filing requirements for the past 90
days.

Yes X              No___

Indicate  the  number of shares  outstanding  of each of the
issuer's
classes of common stock, as of the latest practicable date.

At June 30, 2001, there were 10,819,464 shares of Common Stock,
par
value $.0019 per share, outstanding.









BIONX IMPLANTS, INC. AND SUBSIDIARIES



INDEX




									Page



Part I.  Financial Information


Item 1.   Consolidated Financial Statements

	Consolidated Balance Sheets at December 31, 2000	 	3
	and June 30, 2001 (Unaudited)

	Consolidated Statements of Operations for the Three
	and Six Months Ended June 30, 2000 and 2001 (Unaudited)
	4

	Consolidated Statements of Cash Flows for the Six
	Months 	Ended June 30, 2000 and 2001 (Unaudited)
	5

	Notes to Consolidated Financial Statements (Unaudited)	7


Item 2.	Management's Discussion and Analysis of Financial	9
		Condition and Results of Operations



Item 3.	Quantitative and Qualitative Disclosures about
            Market Risk								18

Part II.  Other Information

Signatures										18













<TABLE>
<CAPTION>
BIONX IMPLANTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

						<C>			<C>
						December 31		June 30
						2000			2001
									Unaudited
<S>
ASSETS						<C>			<C>
Current assets:

Cash and cash equivalents               	$7,050	$5,233
Trade accounts receivable, net of allowance
of $247 and $243, as of December 31, 2000,
and June 30, 2001, respectively		 2,526	 2,585
Inventory, net                             4,679	 3,800
Grants receivable	 				   110	   103
Related party receivables                    402         486
Other receivables                             77          56
Prepaid expenses and other current assets	   392         478
Deferred tax assets                          798         798

Total current assets			      16,034      13,539



Plant and equipment, net                   2,230      2,155
Goodwill and intangibles, net              3,915      3,876
Total assets                              22,179     19,570

<S>
				                  <C>                    <C>

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

	Trade accounts payable                  2,673      1,922

	Long - term debt, current portion           7       7

	Accrued and other current liabilities   1,638     1,441

Total current liabilities                     4,318     3,370

Long-term debt	                              186     213

Subordinated debt                               145     145

Total liabilities                             4,649     3,728

Stockholder's equity:

Common stock                                     21     21

Additional paid-in-capital                   39,872     39,872

Accumulated deficit                         (21,338)    (23,026)
Accumulated other comprehensive income       (1,025)    (1,025)


Total stockholders' equity                   17,530     15,842

Total liabilities and stockholders' equity   $22,179    $19,570
</TABLE>



<TABLE>
<CAPTION>
BIONX IMPLANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

<CAPTION>
					Three Months Ended  Six Months Ended
					      June 30		 June 30
					2000        2001    2000        2001


<S>					<C>	     <C>     <C>         <C>

Revenues:
Product sales                 $4,397      $4,763   $9,368 $9,694
License and grant revenues        69          79      174    129
     Total revenues            4,466       4,842    9,542  9,823

Cost of goods sold             1,690       1,889    3,411  3,437
Gross profit                   2,776       2,953    6,131  6,386

Selling, general and
Administrative		       2,887       3,250    5,817  6,336
Research and development         748         855    1,355  1,730
Patent & litigation expense       28          21      228     85
Severance Charges                -           -        -        -

Total operating expenses       3,663       4,126    7,400  8,151

Operating loss                 (887)     (1,173)  (1,269) (1,765)

<S>
                              <C>          <C>     <C>     <C>
Other income
     Interest and other income 103         53       109    77
     Foreign exchange gain (loss)-          -        -     -
Total other income             103         53       109    77


Loss before provision for
income taxes                   (784)      (1,120)  (1,160)(1,688)

Provision for income taxes       -           -         -     -

Net loss                      $(784)      $(1,120) $(1,160)$(1,688)



Loss per share:
     Basic                    $(0.07)     $(0.10)   $(0.11)$(0.16)
     Diluted                   (0.07)      (0.10)    (0.11)(0.16)


Shares used in computing loss per share:
     Basic                    10,780      10,819    10,223 10,819
     Diluted                  10,780      10,819    10,223 10,819


See accompanying notes to the unaudited consolidated financial
statements.


</TABLE>















<Table>
<Caption>
              BIONX IMPLANTS, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOW
                        (In thousands)
                         (Unaudited)

<Caption>
								Six Months Ended
                                                    June 30
								2000		2001
<S>
<C>		<C>
Cash flow from operating activities:

Net (loss)					            $(1,160)   $(1,688)
Adjustments to reconcile net loss to
net cash (used in) operating activities:
Depreciation and amortization                         301     612
Consignment inventory amortization and write off      426     516

(Increase) decrease in inventory, net                (313)    363
(Increase) decrease in accounts receivable, net       893     (59)
(Increase) decrease in grant receivable               (16)    7
(Increase) decrease in related parties	            119     (84)
(Increase) decrease in prepaid expenses
           and other current assets                   447     (65)
Decrease in trade accounts payable                   (457)    (751)
(Decrease) in current income tax liability             -      -
Decrease in accrued and other current liabilities    (755)    (197)

							           645         342

Net cash (used) in operating activities             (515)     (1,346)

<S>
     <C>              <C>
Cash flow from investing activities:

(Purchases) Proceeds of plant and equipment           47      (342)
(Purchases) of computer software and intangibles      -       (156)

Net cash provided by (used in) investing activities   47      (498)

Cash flow from financing activities:

(Repayment) / increase of long-term debt             165      27
Rights Offering, net				         3,954      -
Proceeds from exercise of employee stock options      89      -
Proceeds from treasury stock to employee benefit plan -       -
Purchase of treasury shares                           -       -

Net cash provided by financing activities          4,208      27

Net (decrease) increase in cash and cash equivalents 3,740    (1,817)
Cash and cash equivalents at beginning of period     3,186    7,050
Cash and cash equivalents at end of period          $6,926    $5,233

Supplemental disclosure of cash flow information:

Cash paid for interest                                $ 8     $ -
Cash paid for taxes                                   $ -     $ -

See accompanying notes to unaudited consolidated financial
statements


</Table>






BIONX IMPLANTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1.	Basis of Presentation

The accompanying financial statements have been prepared by
Bionx Implants, Inc. (the "Company") and are unaudited.  In the
opinion of the Company's management, all adjustments (consisting solely of
normal recurring adjustments) necessary to present fairly the Company's
consolidated financial position as of  June 30, 2001, and the
Company's consolidated results of operations and cash flows for
the three and six  months ended June 30, 2000 and 2001, have
been made. Certain information and footnote disclosures required under
generally accepted accounting principles have been condensed or omitted
from the consolidated financial statements and notes thereto presented herein
pursuant to the rules and regulations of the SEC. The consolidated
financial statements and notes thereto presented herein should
be read in conjunction with the Company's audited consolidated
financial statements for the year ended December 31, 2000 and notes
thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2000 filed with the SEC. The results of
operations and the cash flows for the six months ended June 30, 2001 are
not necessarily indicative of the results to be expected for any
other interim period or the entire fiscal year.



2.	Inventory
<TABLE>
Inventory consists of the following components as of December
31, 2000
and June 30, 2001 (in thousands):
 <CAPTION>

						December 31, 2000   June 30, 2001
<S>
							<C>		    <C>
Raw materials					$  745         $  677
Finished goods - Implants                  2,698          2,411
Finished goods - Instruments               3,855          3,512
Instruments on consignment                 2,495          2,310
<S>
                                           9,793          8,910

  Less:
   Inventory reserve for obsolete and excess
      Instruments and implants               (3,320)     (2,800)
             Accumulated amortization
              - consigned instruments        (1,794)     (2,310)

							   $4,679      3,800



</TABLE>

The Company has been amortizing the cost of instruments provided
to distributors and dealers over their economic life.  The Company
periodically reviews instruments at dealers and distributors to
determine the future utility of the instruments.  During the
second quarter of 2001, the Company has written off  instruments on
consignmentat distributors, resulting in a charge of
approximately $.2 million.



3.	Net Loss Per Share

Basic loss per share is computed using the weighted average
number of sharesof common stock outstanding during the period. Diluted
loss per share is computed using the weighted average number of common
and dilutive potential common shares outstanding during the period.
Potential common shares consist of stock options and warrants
using the treasury stock method.  These optionsand warrants have been
excluded from the dilutive losses per share calculation as their
effect would be antidilutive at June 30, 2000 and 2001.  Shares
used for both the basic loss per share and diluted loss per share
were 10,780 and 10,819  respectively for quarters ended June 30, 2000
and June 30, 2001.

The following tables set forth the calculation of the total
number of shares used in the computation of net loss per common share for
the three and six months ended June 30, 2000 and 2001 (in
thousands):

<TABLE>
<CAPTION>
						Three Months Ended June 30

						2000			2001
	     					<C>		          <C>
<S>
Shares used in computing diluted
loss per share
						10,780	              10,819


<CAPTION>
		                    	Six Months Ended June 30
			         		2000	               2001

	 					<C>			<C>
<S>
Shares used in computing diluted 	10,223	              10,819
loss per share


</TABLE>










Item 2.	Management's Discussion and Analysis of Financial
Condition
and Results of Operations

Overview

Statements regarding future performance in this Quarterly Report
on Form 10-Q constitute forward-looking statements under the Private
Securities Litigation Reform Act of 1995 ("Forward looking
Statements"). The Company's actual results could differ materially from those
anticipated by such forward-looking statements as a result of certain
factors, including those set forth in Exhibit 99.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 2000.

The Company was founded in 1984 to develop certain resorbable
polymers For orthopedic uses.  The Company has incurred substantial
operating losses since its inception and, as of June 30, 2001 had an
accumulated deficit of approximately $23.0 million.  Such losses have
resulted to a large extent from  expenses associated with the
development and patenting of the Company's Self-Reinforcing
technologies and resorbable implant designs, pre-clinical and
clinical studies, the write off and reserve of impaired
inventory, preparation of submissions to the FDA and foreign
regulatory agencies, the development of sales, marketing and
distribution channels, the write-off of acquired in-process
research and development and the development of the Company's manufacturing
capabilities. The Company has recorded losses in recent periods,
including a loss of approximately $4.6 million in 2000 and $ 1.7
million for the six months ended June 30, 2001.  Although the
Company's revenues grew significantly in the late nineties,
sales of the Meniscus Arrow have stabilized and the Company
reported a revenue decrease of  $2.8 million in 2000.  The
Company has been focusing on expanding its market share within
the procedure specific Sports Medicine segment and has
introduced several new products which have started to neutralize
the sales decreases of the Meniscus Arrow.  No assurance can be given
that revenues will grow in the future or that revenues will exceed
expenses. There can be no assurance that the Company will be able
to successfully commercialize its products or that the Company will
be profitable again.

During 2001, the Company continued to implement its initiatives,
begun in 2000, to refocus its business and reallocate critical
resources.  Management has implemented operation improvement
plans and during 2001 is continuing to focus on and evaluate
monthly the effects of these initiatives.  These plans have
included the addition of critical resources in areas that will
have the greatest impact on sales growth and profit improvement;
consolidation of the sales organization designed to improve
sales efficiencies, increase market coverage, and reduce the
Company's cost of sales; reduction in sales administration to
reduce the Company's
verall selling costs;  a refocus of R&D investments on new
product introductions that will provide complementary product
offerings; consolidation of global inventories to reduce the
Company's overall investment in inventories and improve customer
service levels; reduction in inventory levels to improve
inventory turn rates thereby reducing the Company's cash
requirements to support inventory investments; increases in
sales and marketing efforts designed to expand sales
contributions  from  markets  outside of the US;  and the
implementation of surgeon educational programs designed to
increase surgeon awareness and use of
the Company's products.  No assurances can be given that the
Company's initiatives will result in profitable operations in
the future.

A substantial portion of the Company's revenues and revenue
growth in the second half of 1996 and during 1997 and 1998
resulted from sales of the Meniscus Arrow, which received FDA
clearance in March 1996.  During 1997, 1998, 1999, 2000, and the
first six months of 2001, international product sales
represented approximately 15%, 20%, 18%, 17% and 20%,
respectively, of the Company's total product sales.

The Company typically sold, consigned or provided free of charge
to hospitals stainless steel surgical instruments for use with
each of its Self-Reinforced, resorbable products.  The sale of
these instruments resulted in margins which were typically lower
than the margins applicable to the Company's implant products.
For financial statement purposes, revenues from the sale of
instrumentation systems were included within product sales and
costs associated with such systems are included within cost of
goods sold.  However, due to increased competitive activity in
the hospital setting, during the fourth quarter of 1999, the
Company began expensing instruments as they were placed in
hospitals for use by the surgeon.  In the case of consigned
product to distributors and dealers, the Company has been
amortizing the cost of instruments provided to
dealers and distributors over their economic life.  The Company
periodically reviews instruments at dealers and distributors to
determine the future utility of the instruments.  During the
second quarter of 2001, the Company wrote off instruments at
dealers and distributors totaling  $.2 million.

The Company sells its products through managed networks of
sales agents, distributors and dealers.  In the U.S., the
Company handles all invoicingfunctions directly and pays
commissions to its sales agents or
representatives.  Outside the U.S., the Company sells its
products directly to distributors and dealers at discounts that
vary by product and by market.  Accordingly, the Company's U.S.
sales result in higher gross margins than international sales.

Bionx continues to evaluate the formation of strategic
partnerships for
craniofacial products.  The Company believes that with the
appropriate strategic partner who has a focused marketing and
sales effort, coupled with key surgeon champions and a unique
product portfolio, resorbable fixation products can effectively
penetrate this market.  Bionx currently participates in this
market and has established a leadership position for resorbable
pins and screws.  The Company believes that it can leverage its
current position and expand its market presence by introducing
new and innovative products directed towards  these surgical
specialties.  Outside of the orthopedic market, the Company has
intellectual property and techniques for which it may seek to
establish licensing or distribution agreements with strategic
partners to fund and develop certain
products and to market and distribute products that the Company
elects not to distribute through its managed networks of
independent sales agents, distributors and dealers.  No
assurance can be given that the Company will be able to enter
into license arrangements on satisfactory terms.

During 2000 the Company began invoicing European customers in
Euro's.  The
Company invoices more than 85% of its consolidated revenues in
US Dollars.
Approximately 75% of the expenses incurred by the Company are
denominated in US Dollars.  The Company may seek to manage its
foreign currency risk through the purchase of foreign currency
options and forward contracts in the future.  No assurances can
be given that such hedging techniques will protect the Company
from exposure resulting from relative changes in the economic
strength of the foreign currencies applicable to the Company.
Foreign exchange transaction gains and losses can vary
significantly from period to period.

In July 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business
Combinations ("FAS 141") and No. 142, Goodwill and Other
Intangible Assets ("FAS 142").  FAS 141 requires all business
combinations initiated after June 30, 2001 to be accounted for
using the purchase method.  Under FAS 142, goodwill and
intangible assets with indefinite lives are no longer amortized
but are reviewed annually (or more frequently if impairment
indicators arise) for impairment.  Separable intangible assets
that are not deemed to have indefinite lives will continue to be
amortized over their useful lives.  The Company is required to
adopt FAS 142 effective January 1, 2001.  As of June 30, 2001,
the Company had net goodwill  of $3.0 million.  At this time,
the Company does not foresee any possible impairment of its
goodwill in accordance to FASB 142, but understands that market
conditions and other uncertainties may change the Company's
exposure in 2002.

While the Company's operating losses have resulted in net
operating loss
carryforwards of approximately $ 9.4 million for Federal,
foreign and state income tax reporting purposes as of December
31, 2000, the extent to which such carryforwards are available
to offset future U.S. and Finnish taxable income  may be limited
as a result of various ownership changes that have occurred in
recent years.  Additionally, because tax laws limit the time
during which these carryforwards may be applied against future
taxes, the Company may not be able to take full advantage of
these carryforwards for income tax purposes.  Furthermore,
income earned by a foreign subsidiary may not be offset against
operating losses of U.S. entities.  The statutory tax rates
applicable to the Company and its foreign subsidiaries vary
substantially.  Tax rates have
fluctuated in the past and may do so in the future.

The Company's results of operations have fluctuated in the past
on an annual and quarterly basis and may fluctuate significantly
from period to period in the future, depending on many factors,
many of which are outside of the Company's control.  Such
factors include the timing of government approvals, the medical
community's acceptance of the Company's products, the success of
competitive products, the ability of the Company to enter into
strategic alliances with corporate partners, expenses associated
with patent matters, the results of regulatory inspections and
the timing of expenses related to product launches.

In order to develop new products, and to satisfy the needs of
surgeons, Bionx is committed to developing strong surgeon
relationships and supporting medical education.  In this regard,
the Company recently continued its commitment to medical
organizations in the country by becoming a Founding Donor to
AANA (Arthroscopy Association of North America), which is one of
the largest and most respected Sports Medicine associations in
North America.  Bionx was recognized in Seattle during the
AANA's annual meeting alongside other major industry product
innovators.  Also, during the second quarter of 2001, Bionx has
joined
ACFAS (American College of Foot and Ankle Surgeons).  Continuing
to leverage Bionx' advanced technology in resorbable polymer's,
the Company has received 510K notification from the FDA for
expanded indications of its SmartPin and SmartScrew products.


Results of Operations

Product sales
The Company's product sales increased by 8.3% from $4.4 million
during the quarter ended June 30, 2000 to $4.8 million during
the quarter ended June 30, 2001 and by 3.5% from $9.4 million
during the six months ended June 30, 2000 to $9.7 million during
the six months ended June 30, 2001.  Maintaining our focus on
growing market share and diversifying our product line resulted
in sales increases of $0.4 million in the second quarter of 2001
over the second quarter of 2000, and $0.5 million over the 4th
quarter of  2000, and a decrease of $0.1 million from the first
quarter of 2001.

Global Sports Medicine
Consolidated sales of Sport Medicine products, including
instruments increased 9.1% from $3.0 million during the three
months ended June 30, 2000 to $3.3 million during the three
months ended June 30, 2001, and by 5.1% from $6.3 million during
the six months ended June 30, 2000, to $6.7 million during the
six months ended June 30, 2001. Non - Arrow sales accounted for
33% of the second quarter 2001 Sports Medicine sales, with sales
growth of 165% over the same period in 2000. We will continue to
expand our product lines offering the surgeon improved clinical
solutions in all segments our business.

Global  Orthopedic Trauma
Consolidated sales of Orthopedic Trauma products, including
instruments remained stable  at  $0.9 million during the three
months ended June 30, 2000 and June 30, 2001. and decreased
4.3% from $2.1 million for the six months ended June 30, 2000 to
$2.0 million for the six months ended  June 30, 2001.

Global Craniofacial
Consolidated sales of Craniofacial products increased 74.8% from
$.26 million during the three months ended June 30, 2000 to
$.46, during the three months ended June 30, 2001 and increased
19% from $.6 million for the six months ended June 30, 2000 to
$.7 million for the six months ended June 30, 2001.  This is
largely due to strong sales in the international markets
utilizing new focused distributor partners.

International Sales
International sales for the quarter ended June 30, 2001,
comprise 22% of total product sales at $1.0 million, a 25% sales
dollar increase from the quarter ended June 30, 2000.  For the
six months ended June 30, 2001, international sales comprise 20%
of total product sales at $2.0 million.  The Company is
beginning to capitalize on its aggressive marketing plans first
implemented  during the first six months of 2001, and achieve
results with new country specific distributors.



Other Sales
Other sales include grants, licenses, and other product
revenues.  Grant and license revenues totaled $78 thousand for
the quarter ended June 30, 2001, compared with $69 thousand for
the quarter ended June 30, 2000, and totaled $129 thousand for
the six months ended June 30, 2001, compared with revenue of
$174 thousand recorded during the six-month period ended June
30, 2000. This revenue is generated primarily from grants
obtained from a Finnish government research organization which
funds certain research and development projects. Other product
revenues totaled $52 thousand for the quarter ended June 30,
2001, compared with $128 thousand for the quarter ended June 30,
2000, and  totaled $272 thousand for the six months ended June
30, 2001, compared with revenue of $260 thousand recorded during
the six-month period ended June 30, 2000.


Gross Profit
The Company's gross profit increased 6% from $2.8 million to
$3.0 million for the three months ended June 30, 2000, and June
30, 2001, respectively, and increased 4% from $6.1 million to
$6.4 million for the six months ended June 30, 2000, and June
30, 2001, respectively.   Gross profit was 65% of sales for the
six months ended June 30, 2001, increasing from 64% for the six
months ended June 30, 2000, largely due to sales increases
during the period.

Selling, General, and Administrative Expenses
Selling, general and administrative expenses increased by 13%
from $2.9 million in the second quarter of 2000 to $3.3 million
in the second quarter  2001, and increased by 9% from $5.8
million to $6.3 million for the six months ended June 30, 2000,
and June 30, 2001, respectively.  Such expenses were 65% and 67%
of product revenues for the second quarter of 2000 and 2001,
respectively.  The increases stem primarily from the Company's
continued focus and investment in its distributor channels and
fulfillment process improvement teams.

Research and Development
Research and development expenses totaled $0.9 million or 18% of
sales for the second quarter of 2001, up from $.7 million or 17%
of sales for the same period of 2000, and increased 28% from
$1.3 million to $1.7 million for the six months ended June 30,
2000, and June 30, 2001, respectively. The increase in research
and development expenses are a result of the Company's
commitment to providing cutting-edge products for an
increasingly competitive environment.   The Company has
continued its expansion of partnering with key surgeon champions
in the Sports Medicine, Orthopedic Trauma, Craniofacial, and
Stenting fields.  The
Company's strategy of providing procedure specific surgical
solutions depends on its ongoing product development in order to
bring innovative new products to the market and its spending
reflects spending on new products within its established market
and on new products and technologies that are for therapeutic
applications outside of established markets.


Patent and Litigation Expense
Patent and litigation expense decreased 25% from $28 thousand to
$21 thousand during the second quarter of 2000 and 2001,
respectively, and has decreased 62% from $228 thousand to $85
thousand during the six months ended June 30, 2000, and June 30,
2001, respectively.  This is largely due to the current status
of the proceedings and that negotiations are not requiring the
legal assistance that was previously required when these matters
were being more actively pursued.

Other income and expense
In the second quarter of 2001, the Company generated interest
and other income of approximately $53 thousand, and $77 thousand
for the six months ended June 30, 2001.

Income Taxes
The Company recorded no tax provision for the first six months
of 2000 and 2001, due to operating losses for both periods.

Net Loss
The Company reported a net loss of  $1.1 million or ($.10) per
share (basic and diluted) for the quarter ended June 30, 2001
versus a net loss of $.78 million or ($.07) per share (basic and
diluted) for the second quarter of 2000, and a net loss of $1.7
million or ($.16) per share (basic
and diluted) for the six months ended June 30, 2001, versus a
net loss of $1.1 million or ($.11) per share (basic and diluted)
for the six month period ended June 30, 2000.


Liquidity and Capital Resources

The Company has relied primarily upon external  (private and
public) sources of equity to fund operations and development.
At June 30, 2001, cash and cash equivalents totaled $5.2 million
decreasing $1.8 million from $7.0 million in December 31, 2000.
The decreases from December 31, 2001 are primarily due to
decreases in accounts payable and slight increases in capital
spending.  At  June 30, 2001, the Company had net working
capital totaling $10.2 million, or a 4:1 ratio of current assets
to current liabilities.  The Company's liquidity is dependent
primarily upon its ability to improve operating results and
thereby generate adequate cash flow from operations. Management
has taken
several steps designed to improve future financial results and
reduce the amount of cash used by operations, including (i)
developing a management restructuring plan to add critical
resources to areas having the greatest impact in sales growth,
(ii) consolidating sales efforts to improve sales efficiencies,
increase market coverage and reduce selling costs, (iii)
refocusing research and development investments on new product
introductions, (iv) consolidating and reducing inventory levels,
(v) increasing sales and marketing efforts outside the U.S., and
(vi) where possible, reducing other operating expenses. However,
there can be no assurance that these steps will be successful.
The Company's
operations may not provide sufficient internally generated cash
flows to meet the Company's projected requirements. The
Company's ability to continue to finance its operations will
depend on its ability to achieve profitability by improving
sales and margins, its ability to reduce cash outflows and, if
necessary, its ability to obtain other sources of funding
sufficient to support the Company's operations. No assurances
can be given that such funding will be available on satisfactory
terms or at all.

On March 3, 2000, the Company completed shareholder rights
offering, pursuant to which it raised, net of expenses,  $3.9
million and issued 1,586,857 shares of Common Stock.  The
Company distributed 0.173 of a subscription right for each share
of Common Stock outstanding on the January 10, 2000 record date
for a total of 1,586,857 shares offered in the rights offering.
The subscription price of $2.55 per share was established by the
Board of Directors based on a 15% discount from the market price
on January 14, 2000, at the time the offering was priced.

To the extent that funds generated from the Company's
operations, together with its existing capital resources, and
the net interest earned thereon, are insufficient to meet
current or planned operating requirements, the Company will be
required to obtain additional funds through equity or debt
financing, strategic alliances with corporate partners and
others, or through other sources.
The terms of any further equity financing may be dilutive to
stockholders and the terms of any debt financing may contain
restrictive covenants, which limit the Company's ability to
pursue certain courses of action. The Company does not have any
committed sources of  financing beyond that described above, and
there can be no assurance that additional funding, if necessary,
will be available on acceptable terms, if at all. Principal
stockholders of the Company who previously provided funding to
the Company and provided guarantees to sources of credit have
indicated that they do not intend to continue furnishing such
assistance.  If adequate funds are not available, the Company
may be required to delay, scale-back or eliminate certain
aspects of its operations or attempt to obtain funds through
arrangements with strategic partners or others that may
require the Company to relinquish rights to certain of its
technologies,
product candidates, products or potential markets. If adequate
funds are not available, the Company's business, financial
condition and results of operations could be materially and
adversely affected.  The sufficiency of the Company's capital
reserves with respect to operations beyond June 30, 2001 will
depend primarily upon the Company's operating results and the
extent to which such results are capable of funding anticipated
growth.

The Company believes that existing capital resources together
with cash flow from operations (if, and to the extent,
generated), will be sufficient to fund its operations during
2001.  This statement constitutes a Forward-Looking Statement.
Actual results could differ materially from the Company's
expectations regarding its capital requirements and its sources
of capital.
The Company's future capital requirements and the adequacy of
available
capital resources will depend on numerous factors, including the
Company's
ability to reverse recent trends and successfully perform
management
initiatives,  market acceptance of its existing and future
products, the
successful commercialization of products in development,
progress in its
product development efforts, the magnitude and scope of such
efforts,
acquisition opportunities, progress with preclinical studies,
clinical trials and product clearances by the FDA and other
agencies, the cost and timing of the Company's efforts to expand
its manufacturing capabilities, the cost of filing, prosecuting,
defending and enforcing patent claims and other intellectual
property rights, competing technological and market
developments, and the development of strategic alliances for the
marketing of certain of the Company's products.  The Company's
operations did not produce positive cash flows during 1994,
1995, 1996, 1998, 1999 or 2000. To the extent that funds
generated from the Company's operations, together with its
existing capital resources, and the net interest earned thereon,
are insufficient to meet current or planned operating
requirements, the Company will be required to obtain additional
funds through equity or debt financing, strategic alliances with
corporate partners and others, or through other sources.  No
assurances can be given that such funds will be made available
to the Company on cceptable terms or at all.





























































Item 3.  Quantitative and Qualitative Disclosures about Market
Risk

The company's Finland unit completed a currency conversion from
the Finnish Markka to the Euro, effective May 1, 2001. The
Company may seek to manage its foreign currency risk through the
purchase of foreign currency options and orward contracts in the
future.  No assurances can be given that such hedging techniques
will protect the Company from exposure resulting from relative
changes in the economic strength of the foreign currencies
applicable to the Company.  Foreign exchange transaction gains
and losses can vary significantly from period to period.

No other change since filing of the Company's Annual Report on
Form 10-K
for the year ended December 31, 2000.

Part II. Other Information

(a) The Registrant did not file any Current Reports on Form 8-K
during
the quarter ended June 30, 2001.

















SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the
Registrant has duly caused this report to be signed on its
behalf by the
undersigned thereunto duly authorized.

BIONX IMPLANTS, INC.

	By:	/s/ Gerard Carlozzi

	Gerard Carlozzi, President
	and Chief Executive Officer

	By:	/s/ Andrew Karazin

	Andrew  Karazin, Chief Financial Officer





Dated:  August 14, 2001